Walking around the Capitol this week, you could almost
feel the thick stench of inertia. Quite bizarrely, I found myself wishing it
was 2007 again.

Lawmakers have trotted back after a two-week spring
break, but no one appears to know why.

There is little progress on Gov. Granholm’s early
retirement plan for state employees and teachers that was once hoped to save
$400 million towards the state’s $1.7 billion budget gap. After legislative
meddling, it looks like it will save about enough to buy an extra value meal at
McDonald’s.

The Senate GOP’s much-vaunted “Year of Reform” is now
DOA. Republicans claimed they could scrounge up $2 billion in (mostly local,
not state) savings, but they can’t even grease the lowest-hanging fruit like
changes to police and fire contract arbitration through the Democratic-led
House.

And any hope of the state’s $44 billion budget being
enacted on time evaporated as Senate Republicans decided now was the perfect
time to pick a fight with Granholm over appointments to university boards few
citizens know exist. Although Senate Majority Leader Mike Bishop (R-Rochester)
failed to show the little lady who’s boss on Thursday by slaying 15 of her
appointments, he should have the votes to do so next week.

As for any future cooperation during a critical fiscal
year for Michigan, the ever-brusque Senate Minority Leader Mike Prusi
(D-Ishpeming) sighed, “This may have smothered it.”

Yes, come to think of it, inertia is too tame a term
for the atmosphere in Lansing, as about half of the major elected officials are
on their way out, thanks to term limits.

It’s as though rigor mortis has already set in.

I suppose that’s why I’ve been fantasizing about
turning back the clock three years. That was the start of the era of Granholm,
Bishop and House Speaker Andy Dillon (D-Redford Twp.). The world’s most
dysfunctional threesome barely knew each other back then. But with three young, dynamic,
highly educated individuals, there was the short-lived promise of constructive
leadership.

Ego, ambition, ideology and inexperience quickly put
the kibosh on that, of course.

And so 2007 was marked by scores of false starts in
resolving a $1.8 billion budget deficit, intense squabbling, round-the-clock
legislative sessions, a brief government shutdown and a modest tax increase.

The current discord in Lansing is the progeny of that
lost year.

Hindsight is 20/20, of course. But it didn’t take a
soothsayer to see where we would end up today.

Michigan’s best public policy resource, the nonpartisan
Citizens Research Council, has been warning for more than a decade that the
state’s finances were out of whack and it wasn’t sustainable. We have a
structural budget deficit, which means that even if the economy magically
recovers tomorrow, our tax system still won’t bring in enough money to fund
basic services like schools and police.

The Mitten State has been suffering through a
decade-long recession. So it doesn’t take a Nobel Prize in Economics to deduce
that we would be severely broke right now.

As for Michigan’s economy, there’s always a risk when
too many of your eggs are in one basket. For decades, the auto industry was
very good to Michigan, but that came crashing down when the world economy did
in September 2008. The writing was on the wall well before then, however.

The Big Three were not making cars people wanted to buy,
while foreign companies happily gobbled up their market share. Both labor and
management grew complacent, as everyone assumed GM would always be around, no
matter how many layoffs, outsourced jobs or quarters drowning in red ink. The
SUV boom of the ‘90s and cheap gas dragged things out awhile longer, but their
fate was sealed.

All that points to the fact that leaders in Lansing
could have taken the long view in 2007. Rather than focus on the easiest
solutions, like making the least amount of cuts to education, health care and
the courts as possible, they could have made a real effort to overhaul the way
the state does business.

The reforms legislators are pushing this year have been
kicking around the Capitol for years. If we’d implemented a public employee health
care pool in ’07 over the cries of dinosaur union types, local and state
governments could have hundreds of millions of more dollars to keep their doors
open today.

The income tax increase of ‘07 was hard, because
raising taxes always is. Lawmakers also bungled the sales tax, resulting in a
quick do-over by hiking business taxes. No economist of any political stripe
will tell you their solution was terribly effective. The tax system itself,
just like state government, is hopelessly outdated. People spend far more money
on services now than they did decades ago, so it makes sense shift the tax
burden there.

Income taxes in Michigan are not high, but the rate is
the same, whether you are a billionaire like Dick DeVos or make minimum wage
frying up burgers. A graduated rate, as the vast majority of other states have,
would bring in a more consistent revenue stream.

And our business tax system continues to be baffling.
When lawmakers came up with the Michigan Business Tax in ’07, they kept the
gross receipts levy, instead of going with a simple business income tax.

But now the debate has become so toxic that lawmakers
are flogged just for thinking about reforming the tax code, which must be some
Communist plot even if it’s revenue neutral.

Unfortunately, it looks like the time to act on
anything of consequence was three years ago. In this election year, leaders are
just going through the motions.

And we’re left with what’s essentially a zombie
government in Lansing.

Susan J. Demas is a political analyst for Michigan
Information & Research Service. She can be reached at sjdemas@gmail.com or
http://susanjdemas.blogspot.com.